Introducing Money

Money is any object that is generally accepted as payment for goods and services and the repayment of debt.

The monetary economy is a significant improvement over the barter system, in which goods were exchanged directly for other goods.

M1 captures the most liquid components of the money supply, including currency held by the public and checkable deposits in banks.

M2 is a broader measure of the money supply than M1, including all M1 monies and those that could be quickly converted to liquid forms.

In addition to the commonly used M1 and M2 aggregates, several other measures of the money supply are used as well.